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The Rise and Fall of the Dependency

Movement: Does It Inform
Underdevelopment Today?
University of Oxford
While dependency theory as a conscious, explicit approach to development
can be considered a thing of the past, its legacy is very much with us. The
impact that dependency ideas held in Latin American centers of academia was
pervasive, while also gaining many adherents in Europe and the United States.
Perhaps more importantly, this impact went beyond scholarly circles. As Falcoff
(1980, 797) observed, dependency explanationsare no longer confined to
academic sanctuaries; they are now the common currency of a growing body of
generals bishops, editors, chiefs of state, even Latin American businessmen.
What gave the dependency perspective particular allure is that, unlike other
previous paradigms, it was held to be a distinctively Latin American analysis of
Latin American development. Its legacy can be discerned from the
pronouncements of Latin American scholars, policymakers and politicians who
choose to put the emphasis on the structural conditions of the world economy
that work against the prospects of the regions economies. Understanding the
dependency movement is important, not least because it is a consequential
episode in the history of social thought in Latin America. It also marks one of
those rare instances in which ideas produced in the Third World come to influence
the thinking of scholars in the developed world. Indeed, the supply of
underdevelopment theory (principally structuralism and dependency) has been
regarded as Latin Americas major contribution to the social sciences.
Dependency theory was betrayed by the very formulation of its name, for it
is not a theory, properly speaking, but can more accurately be conceived of as
E.I.A.L., Vol. 14 No 2 (2003)



an approach to the study of underdevelopment.1 (In fact, Cardoso and other

dependentistas objected to the term theory to describe it.) It is an overarching
framework within which one might formulate specific hypotheses/theories, a
methodology for the analysis of concrete situations of dependency. It did not
predict determinate, discrete outcomes. Rather, it sought to provide a new
perspective from which to examine the problematique of economic
backwardness.2 Moreover, one cannot speak of a theory of dependency, since
various variants of the approach can be discerned. A very rough distinction has
been made between moderate and radical dependency writers, but more than
subtle differences characterize the various authors within each camp.
Given the many interpretations given to dependency, how can one capture
the concept of dependency in a concise manner? One of the movements leading
exponents, Brazilian Theotonio Dos Santos, defines it as a historical condition
that shapes a certain structure of the world economy such that it favors some
countries to the detriment of others, and limits the development possibilities of
the subordinate economies (1973, 109). Whereas liberals (mainstream
economists) define underdevelopment as a condition in which countries find
themselves in, dependentistas see it as a process in which less developed nations
are trapped because of the relationship between the developed and
underdeveloped countries (or, in their lexicon, the center and the periphery)
in the world economy. That is, the same system that creates wealth for some
nations generates poverty for most others. Development and underdevelopment
are two sides of the same coin. The implications of both analyses are clear.
While for liberals underdevelopment is a condition or situation from which
countries can escape through a set of virtuous economic policies, dependency
writers see no such possibility. Andre Gunder Frank famously labeled the process
under which Latin American and other nations were embedded as the
development of underdevelopment. Other more moderate variants of
dependency saw the possibility of dependent development.
Perhaps due to its eclectic origins, the term dependency has been subjected
to a multitude of approaches and interpretations. What is particularly problematic
to its understanding is that scholars have used those particular aspects they
considered more relevant, without making their understanding of dependency
theses explicit. As various observers have pointed out, most definitions of
dependency are of the Humpty-Dumpty type that is, meaning what I say it
means. Moreover, these scholars assumed that when others have written about
dependency, their concepts also mean what I say they mean (Acevedo 1984).
As a matter of fact, miscommunication all too often gave rise to futile intellectual
exchanges between dependentistas and non-dependentistas in many academic
and non-academic venues.



Perhaps in part due to the sheer ambiguity and multiple interpretations of its
message, the movement did not command serious attention in the North. But
the question deserves more thorough consideration: what factors explain the
relative lack of attention dependency received in mainstream North American
academic circles? A useful starting point is to note that there has been (and there
still exists) a certain degree of parochialism on the part of the Anglo-Saxon
community of scholars. In a laudable instance of self-assessment, one Northern
academic notes the following:
The referencing of our professional papers reveals that not many
of us even glance at journals and books published overseas... few
economists of the North could even today give an authoritative
assessment of the work of Raul Prebisch, say, nor are our
sociologists and political scientists much better informed about
their counterparts in Brazil or Mexico. It is hard to resist the
conclusion that most of us just do not care, assuming tacitly that
nothing of intellectual significance is produced in the backward
continents... (Seers 1981, 13).
Predictably enough, this parochialism had unfortunate consequences. Because
by and large only dependency literature translated to English was read by scholars
in the center, there emerged flawed, prejudiced, or incomplete interpretations
of dependencys ideas. This partial consumption of works produced in the
periphery meant that a lot of country-specific material focusing on the domestic
structure of dependence was not read. It is not surprising, then, that critics of
dependencia were often entirely off the mark. For instance, many northern
academics erroneously interpreted dependency as a theory centered exclusively
on external reliance. [Dependency] deprives local histories of their integrity
and specificity, thereby making local actors little more than the pawn of outside
forces (Smith 1979), writes American scholar Tony Smith in the prestigious
journal World Politics. Many other examples could be brought to bear.
One does not have to look far to find the continuing influence of dependency
ideas in Latin America and among Latin Americanists. Consider one of the main
standard undergraduate textbooks for the study of the region, Modern Latin
America, by Peter Smith and Thomas Skidmore. Among the ideas that students
reading this text can encounter, we find the following:
political outcomes in Latin America derive largely from the social
class structure... the class structure derives largely from each



countrys position in the world economy... a comparative perspective on these phenomena can help elucidate the variations and
the regularities in Latin American society and politics (Skidmore
and Smith, 9-12).
In truth, class cleavages are not always predominant in Latin America, and a
countrys class structure derives from a more complex set of factors than its
position in the world economy. Clearly, some Latin Americanists have still
not escaped from dependency tenets, even in an age when it is a thoroughly
discredited outlook on underdevelopment. Its view of North-South relations
remains deeply ingrained in more than a few minds, especially within Latin
American scholarly circles. This is the most obvious manifestation that the legacy
of the movement is still with us. It is therefore important to understand where
the dependency movement comes from, what it says, and the ways in which it
may be inconsistent or outright flawed.
The Intellectual Flaws of Dependency
Perhaps the most glaring weakness of dependency was its lack of empirical
grounding. If one accepts Karl Poppers famous dictum that in order for a theory
to be scientific it must be testable and falsifiable, dependency theory can be said
to be patently unscientific. While many social scientists attempted to
operationalize and put dependency assertions to the test, this trend met with
strong dissent from leading dependency figures. They countered that the very
basic characteristic of dependency studies was the emphasis on global analysis
and that a structural or global interpretation could not be subjected to simple
empirical evaluation (Cardoso and Faletto, xii). The schools propositions, they
contended, could not be easily cast in mathematical nomenclature because the
theory is in large part about hierarchies, institutions and attitudes. This objection
has been defended by some scholars who are not themselves dependentistas
(Valenzuela and Valenzuela 1978). Yet, because of the movements pretension
to stand beyond questions of definition and evidence, the dependency movement
was not able to avoid charges of intellectual arrogance. (To be sure, that is an
accusation that could easily be thrust upon many individual dependency
academics themselves, and also upon many of their critics. The debate between
the opposing camps, dependentistas versus non-dependentistas, exhibited
anything but moderation in discourse and rhetoric.)
Whatever appeal and magnetism the theory may have had, for many social
scientists the methodological faults of the approach were too obvious to ignore.
Moreover, the tautological elements found in dependency writings further
damaged the reception of dependency ideas in the developed world.



Dependentistas did not show how the actual mechanisms of dependency

worked, so that the parts became lost in the totality:
Everything is connected with everything else, but how and why
often remains obscure... One looks in vain through the theories of
dependency for essential characteristics of dependency. Instead,
one is given a circular argument: dependent countries are those
which lack the capacity for autonomous growth and they lack this
because their structures are dependent ones (OBrien, 14).
Another tautology which some dependency writers incurred in was to include
in the definition of development the concept of economic autonomy. If one
asserts that the position of less developed nations is structurally dependent and
that first world status necessarily entails economic autonomy, then economic
prosperity is unattainable by definition. Needless to say, circular argumentation
runs counter to the basics of scholarly inquiry.
As it has happened with many other theories, its deterministic elements did
much to undermine dependency. In particular, it has been said that the movement
suffered from double determinism. (Stalinad 1985). One concerns its views
on the relationship between economics and politics. It holds, in Marxist fashion,
that the political system is shaped by its economic base. Secondly, it holds that
the nature of a countrys links to the international system decisively shapes its
domestic politics, an idea at the heart of nationalism. Indeed, dependency is a
rather uneasy blend of traditional Marxism and economic nationalism. To
illustrate the untamed economism that characterized many (though not all)
members of the movement, consider the following passage from Andre Gunder
Frank (the best-known dependentista in the English-speaking world) in his
Capitalism and Underdevelopment in Latin America: the domestic economic,
political and social structure of Chile always was and still remains determined
first and foremost by the fact and specific nature of its participation in the world
capitalist system (1967, 29). It is not surprising that many objected to the
deterministic quality of this and similar assertions. Determinism also burdens
dependency with what Stephan Haggard has called the structuralist paradox.
The model was outlined to help identify the international constraints associated
with certain development paths in order to overcome them. However,
dependency does not allow for the possibility that particular state strategies
may act to reduce those international constraints. Indeed, behavior disappears.
Countries are called dependent by virtue of their characteristics and remain
so regardless of their actions, rightly notes Haggard (1990, 21-22).



Furthermore, the scholarly pretensions of the dependency movement were

undermined by what many have interpreted as an underlying, barely concealed,
political agenda (Pakenham 1992; Gilpin 1987). This criticism stems from the
normative conception that politics and academia are fields best kept in separate
domains. As Princetons Robert Gilpin has observed,
the conceptions of development and underdevelopment held by
dependency theorists are as much political and social concepts as
they are economic; these theorists desire not merely the economic
growth of the economy, but also the transformation and
development of the society in a particular social and political
direction (1987, 287).
That desired social and political direction, of course, was that of a socialist
state, an independent, equitable, and industrialized nation-state. James
Carporaso also echoes Gilpin: while others see their theories as intellectual
constructions which attempt to change reality, dependency theorists attempt to
use their ideas to change reality (1980, 613).3 However, to be fair, not all
dependendistas drew particular policy implications or solutions from their
Finally, the rather esoteric style of many dependency writings did not help
their cause either. One scholar, assessing Cardoso and Falettos Dependency
and Development, decries the authors ornately Hegelian style which is held
to be partly responsible for the confusing and even contradictory message of
dependency theory (Staniland, 134). Says another academic: In a literature so
fraught with ambiguity, inconsistency and vagueness, it is difficult to say with
assurance precisely what is meant by dependency (Baldwin, 495). Similar
criticisms are echoed by many other scholars. Even Fernando H. Cardoso himself
admitted that if there have been so many distortions in the consumption [of
dependency theory], it is because the original production was not clear regarding
several points (1977, 17).
In sum, dependency has been subjected to a barrage of criticism on theoretical,
empirical, methodological, and stylistic grounds. To their credit, dependentistas
had the vision and audacity to think big and to aim to create a new paradigm.
The task at hand, however, may have been doomed from the start for the
interdisciplinary, historical, total and multiple character of dependency analysis
makes the creation of such a paradigm an almost impossible task (Kay 1989,



The Origins and Evolution of Dependency Theory

Dependency theory is very much a product of a particular place and historical
period. With political independence largely secured after the Second World War,
Latin American intellectuals became keenly cognizant of their continents
underdevelopment or subdesarrollo.4
Argentine economist Ral Prebisch, because of his contributions both as an
academic and practitioner, can rightly be pointed to as the leader of the
desarrollista or structuralist school and a forerunner of the dependency school.
The structuralist or Prebisch-Singer thesis held sacred a number of tenets that
ran counter to the orthodox, neo-classical economic pense of the time. Chief
among the arguments accounting for Latin American underdevelopment was
the excessive reliance on exports of primary commodities, which were the
object of fluctuating prices in the short term and a downward trend in relative
value in the long haul. Studies by Hans Singer documented a secular deterioration
in the terms of trade of Latin American countries, whereas Prebisch can be
credited for explaining the factors underlying this downward trend. If the SingerPrebisch analysis was right, participation in the world trade regime was a losing
proposition for many developing countries.
It is difficult to overstate the extent to which this doctrine of unequal
exchange sowed doubt among many Latin American social scientists about the
beneficial assumptions of the classic theory of international trade, thus pushing
them to the dependency camp. So called trade pessimism became widespread.
In his status as head of the UNs Economic Commission of Latin America
(ECLA), Prebischs ideas came to have far-reaching political influence and
profound policy implications. As a result of the influence of structuralist thought,
most Latin American countries adopted strategies nominally conducive to
autonomous, self-sustaining development. In essence, they sought to diversify
exports and accelerate industrialization through import substitution. High tariff
walls were to be erected that would reduce the regions dependence on foreign
manufactures, and thus on the developed North. But this model of development
soon ran into problems. Most worrying of all, it exacerbated balance of payments
difficulties in many countries.
The expectations and predictions that structuralists had for the import
substitution model did not ensue: real wages were not rising fast enough to
increase aggregate demand; problems of unemployment were growing more
acute; foreign investment was not having the positive effects expected of it; and
industrial production was not having a ripple effect throughout the economy
(Palma 1978, 908). These real life developments had an important impact on
academic thinking. The realization that import substitution created new, and
possibly more dangerous forms of dependence converted the ECLA structuralists



into dependency theorists, writes Dudley Seers (1981, 140). The crisis in the
ECLA school of thought produced a movement towards a more structural and
historical analysis of Latin America. These analystsincluding Osvaldo Sunkel,
Fernando Cardoso, Celso Furtado and Theotonio Dos Santosdeveloped a
framework of study that intimately linked internal economic problems to
developments in the world economy.
Sociologist Fernando Henrique Cardoso came to represent dependencys most
sophisticated interpretation of underdevelopment. The publication of his
Dependency and Development in Latin America (with Chilean economist
Faletto), and Peter Evans Dependent Development: The Alliance of
Multinational, State and Local Capital in Brazil, set the foundations of the
historical-structural variant of the dependency school. For authors in this tradition,
dependency is not a general theory of underdevelopment, but rather a
methodology for the analysis of concrete situations of dependency. Cardoso
spearheaded a new wave of dependentistas for whom dependency relations could
well lead to development what they termed associated-dependent
development. Dependent development also constituted a reaction against leftwing dependentistas and more crude versions of dependency most notable
among them, Andre Gunder Frank and did not advocate for a socialist
revolution as the way out of their present economic plight.5 The very use of
the term dependency was utilized to underscore the extent to which the economic
and political development of poor countries was conditioned by the global
economy, whose center of gravity was located in the developed nations. This
variant of the dependency school, however, did not just focus on the asymmetrical
relations between countries. It also held that dependency was perpetuated by
the ensemble of ties among groups and classes both between and within nations.
This is the concept of linkage. In Dependencia y Desarrollo, the authors
describe it thus:
We conceive the relationship between external and internal forces
as forming a complex whole whose structural links are not based
on mere external forms of exploitation and coercion, but are rooted
in coincidences of interests between local dominant classes and
international ones... (Cardoso and Faletto, xvi).
In fact, this is one of the concepts that most distinguishes the historicalstructural version of dependency from previous ones: the identification of interest
networks business, technocrats, the military, the middle-class that bind the
dynamics of local political and economic processes to material and political
interests in the industrialized world. This new wave of unorthodox dependency



writers saw development as historically open-ended, so that their explanation

of underdevelopment was less deterministic than that of Gunder Frank-minded
scholars. Cardoso, Evans, Dos Santos and others conceived of various degrees
of dependency for different countries, and also allowed for the possibility that
the nature of dependent relations could change over time.
The Death of Dependencia
Dependency rose to prominence in the 1960s. By the mid-1980s it had been
relegated to footnote status in the field of development studies. The reasons for
this rapid demise are varied but identifiable. As one scholar has summed up,
the combination of intellectual critiques and reinforcing international trends
had a devastating effect on dependency analysis (Stallings 48, 1992). The
consequence is that dependency is rarely even mentioned today. Perhaps the
premier factor leading to its demise is that its overall claim reiterating the
impossibility of development within the framework of our world capitalist system
has suffered a severe correction by the facts of the late twentieth century. The
evolution of at least four economies South Korea, Singapore, Taiwan and
Hong Kong showed two things radically at odds with dependency tenets:
first, that attaining economic progress is very much possible; and second, that it
is feasible via enhanced integration with the world economy. To be sure, these
societies can be considered to have joined the ranks of the developed world in
their own right. Furthermore, the late 1990s Asian financial crisis
notwithstanding, four other Asian candidates have often been mentioned as
examples of countries pursuing rather successful development strategies. These
are the so-called Asian pussycats: Philippines, Thailand, Malaysia and Indonesia.
A second identifiable factor in the demise of dependency has to do with the
evolution of the economics profession. In their drive to join the ranks of genuine
scientists, namely their colleagues in the physical sciences, economists have
gradually come to emphasize rigor in their research work, so that the
mathematical formalization of assertions and hypotheses rapidly became the
sine qua non of economics. This had obvious consequences for the reception of
the dependency theory by mainstream economists, as the dependency perspective
was always in the tradition of political economy and not economics proper.
Leading dependentistas defended their territory by responding that any attempt
to quantify and test dependency tenets was misplaced, essentially because
dependency dealt with historical processes not amenable to quantification. But
this line of defense did not preclude their marginalization by mainstream
The nail in the coffin for the dependency movement, if any was needed, was
the fall of socialist/communist regimes. Marxism, in its role as intellectual



bedrock of these political entities, has been largely invalidated as a socioeconomic paradigm and lost the allure that it might have once enjoyed. Because
the experience with real socialism has been proven an unmitigated failure, its
Marxist intellectual foundations have been widely regarded as fundamentally
flawed as well. Dependency, in its status as an allied theory, suffered much the
same fate. In fact, the Marxist label that all too often came attached to
dependentistas caused them to lose credibility amidst mainstream academic
circles from the very early days.
On the terrain of intellectual currents, a consensus among economists began
to crystallize in the 1980s about the benefits of trade openness, Foreign Direct
Investment and a small state. This emerging consensus acquired significant
political clout as soon as the international financial institutions, rather than private
banks, commanded most of the available capital to developing countriesafter
the Mexican debt moratorium declaration in 1982. A powerful intellectual critique
laid at the doorstep of dependentistas was that a common international economic
environment did not explain the different development trajectories and strategies
followed by less developed nations. Dependency analysts, these critics contended,
had gotten their logic backwards: it was the development strategy of a particular
country that determined its need for foreign capital, not the other way around.
Domestic forces of development were being underemphasized.
In summary, all these developments taken together led to a calculated
ignorance of the movement and often to its outright dismissal. Political scientist
Stephan Haggard lamented this state of affairs: Criticizing dependency theory
has become an academic industry of the worst sort. The crudest formulations
are attacked with vehemence, the overall contribution and the more sophisticated
variants ignored (Haggard 1990, 19).
The Currency of Dependency?
None other than one of the movements leading lights, Fernando H. Cardoso,
has changed his view of the mechanics of the world economy. Speaking as head
of state of Brazil, he has said: today we [in the Brazilian government] believe
that the international stage offers advantages to everyone. The zero-sum game,
whereby the benefit of one part implies the loss of the other, is already obsolete
(quoted in Estefana 1998, 283). In the same vein, he has urged for the need to
liberate ourselves from old ideological dilemmas. In light of this dominant
intellectual climate, it would seem difficult to contend that dependency holds
any relevance today whatsoever. Dependency assertions are certainly defunct.
Nevertheless, the issues that inform this paradigm have not disappeared. Indeed,
they have probably acquired added relevance. (The approach informing this
discussion will be the Cardoso-type, historical-structural variant of the



dependency movement.) One would do well to remember that throughout the

1990s the world economy [was] far more unstable and its performance more
uncertain than in the 1950s and 1960s (Helleiner, 108). External shocks
terms of trade deterioration, reduced demand for exports, international interest
rate increases have reared their ugly head with disturbing frequency in recent
years and thereby lent currency to dependency concerns.
Does the nature of the international economy today give currency to the
dependency outlook? Could it be asserted this intellectual movement provides
more wisdom today that at any other time since its inception? At a very general
level, the answer is apparent. Dependency emphasizes links between national
governments (leverage), between Northern and Southern elites (linkage), and
between national economies (markets). Global economic integration naturally
entails a strengthening of the links between markets and, more indirectly, of
links between governments and elites. Globalization has been defined as the
process whereby national economies are progressively integrated into the
framework of the international economy in such a way that their evolution will
depend more and more on international markets and less on the given economic
policies pursued by governments. This idea already brings forth the framework
of reference that informs dependency theorists.
Changes in the trade and monetary regimes bring changes to the rules of the
world economy that developing nations have to take as given i.e., they cannot
influence the context in which they must undertake their development strategies.
Moreover, the room for maneuver in terms of economic policy-making can be
small indeed. However, the idea that the end of development must be national
economic autonomy, as dependentistas would have it, is rather perplexing and
mystical unless, of course, one takes it as an article of faith that severing links
with the industrialized world will improve standards of living, which is ludicrous.
The most cursory review of economic history reveals that economic autarky is
not the road to prosperity. Neither economic isolation nor integration into the
international economy can guarantee economic growth; simply said, economic
development is the result of a much more complex matrix of factors.
Just how relevant is the dependency framework as a useful tool for the study
of underdevelopment? A few scholars still hold that dependency is a more fruitful
approach than neoliberalism for the analysis of the problems of
underdevelopment (Kay, 1998; Ghosh 2001). This view is untenable, not least
because it assumes that dependency is a fully developed, self-contained theory
of development, when it is not. Dependency analysis has no specific proposals
for how to improve productivity, increase the rate of growth, wage the war on
income inequality, diversify and expand exports, or increase domestic savings,
to name a few crucial economic challenges. The danger run by those espousing



dependency tenets uncritically is that they fall prey to the idea that development
is an elusive goal as long as reforms in international economic regimes (trade,
monetary, financial, etc.) are not undertaken. The reality is that there is much
room throughout the Third World for undertaking domestic policies to improve
domestic economic conditions within the rules of the current international
economic order. While changes in trade and monetary regimes would be of
much help indeed, they are far from panaceas. Dependency defenders
conveniently omit the fact that a plethora of internal causes are crucial for
explaining underdevelopment.
Notwithstanding the heaps of criticism, many non-dependentistas are still
intent on salvaging the validity of certain aspects of the perspective. Political
scientist Stephen Krasner has argued that
dependency theory is useful because it offers a much broader range
of criticisms of the postwar economy than did Prebisch and other
early [structuralist] writers. It explains many phenomena within a
single overarching framework: terms of trade, capital flows,
technology transfers, consumer tastes, political oppression can all
be systematically linked with the workings of the world capitalist
system (Krasner, 85).
Again, this and similar statements can be undermined with ease: terms of
trade obey basic rules of long term demand and supply and may not be negative;
international capital flows, while not exempt from risks, allow many LDCs to
tap into external savings and smooth consumption patterns; technology transfers
are one of the benefits associated with Foreign Direct Investment; political
oppression, where it may exist, has causes other than economic interactions
with the developed world; public consumption patterns in the poor countries,
while certainly skewed in ways uncongenial to development, can be better
explained by reference to domestic political economy factors... It is indeed
difficult to soundly uphold many of the specific claims of dependentistas.
What the dependency perspective fails to recognize is that nation-states,
however weak politically and poor economically, can take domestic steps to
reduce their vulnerability to the vagaries and uncertainties of the international
economy: if a countrys foreign exchange comes largely from a single export
commodity, making it vulnerable to price fluctuations on the world market, that
country has the option to work to diversify its exports; if it is too dependent on
foreign savings to balance its accounts or to undertake needed investment, it
can take measures to steadily prop up domestic savings. Granted, these steps
are fraught with difficulty, take time, and are more easily spelled out than



accomplished. However, the larger point remains that developing nations enjoy
some autonomy of maneuver, and that, to an important extent, their vulnerability
to developments in the world economy is a function of their own domestic
economic and social policies.
If something unites orthodox and unorthodox dependentistas, it is the view
that dependency is a pervasive set of transactions that condition all aspects of
a societys character and behavior (Krasner, 42). Therein lies a second fatal
error. Dependency analysis emphasizes the interdependence of economic and
political relations, but it does so in an overly economistic way. Its analysis does
not grant underdeveloped states political autonomy of action. Rather, policymaking elites in Asia, Latin America and Africa are depicted as allies and puppets
of First World economic interests. Again, this is a case where empirical
developments have demolished one of the pillars of the movements theoretical
edifice: the vigorous political demands made by Third World leaders in the
1970s for a New International Economic Order could not be squared with
dependency arguments.
Viewing the international economy as an amalgam of economies interacting
with one another in politically neutral terms flies in the face of everyday
experience. Much to the contrary, power asymmetries shape economic
relationships and interactions between the developed and the underdeveloped
countries. As is well known, economists make the concept of power exogenous
to their analysis. Liberal economics artificially separates the economy from other
aspects of society and accepts the existing sociopolitical framework as given.
For mainstream economists, the framework of social, political and cultural
institutions lies outside their analyses of underdevelopment. Liberalism is devoid
of a theory of the dynamics of international and national political economy.
That makes its understanding of the wealth and deprivation of nations
conspicuously incomplete. In fact, during the past quarter century, the ascension
of international political economy as a field of study in its own right has responded
to an increased recognition that political (and other non-economic) factors
between and within nations influence economic outcomes and vice versa.
In sum, the dependency perspective obfuscates our understanding of
development in many ways, most importantly by denying domestic actors
autonomy in the direction in which they want to steer their economies and
neglecting the causes of poverty that can be attributed to domestic policies. It
can only be said to contribute to our understanding of development problems in
an indirect way: insofar as it underscores the external dimension of economic
development. Political economist Barbara Stallings introduces three mechanisms
by which the international system influences the operations of less developed
countries. All three are emphasized by the dependency school:



One concerns the operation and impact of international markets

that constitute the constraints and opportunities within which
Third World actors must operate. A second stresses the economic,
political, and ideological linkage between domestic groups and
international actors. The third concentrates on the power relations
between international actors and Third World governments, the
question of leverage (Stallings, 48-49).
Let us look at these three factors in brief. Although the tribulations of the
world economy affect all countries, they are not affected in a similar way: less
developed economies are particularly vulnerable. A countrys crucial external
link to the world economy is the export market. Demand for exports will be a
function of both the health of the global economy (level of worldwide economic
activity) and the evolving characteristics of the world trading system. If, as
economist Jagdish Bhagwati has described it, this trade system is at risk because
of the pervasive presence of tariffs, quotas, and non-tariff barriers in the industrial
world, developing nations will inexorably pay a high price. The volume and
value of a countrys exports are paramount for, among other things, they indicate
its relative ability to avoid severe economic problems. In fact, the World Bank
defines a nation as Heavily Indebted in terms of its debt/exports ratio; countries
are considered to have unsustainably high debt burdens if they represent 220%
of exports or higher. International financial markets figure as a second
independent variable that influences dependent economies. When imports exceed
exports in value trade deficits finance is invariably required to bridge this
gap. How much countries can feasibly borrow and in what terms are matters of
no slight relevance. Less developed nations have little or no say over the very
terms of borrowing that so deeply affect them: interest, fees, and maturity. Finance
can be obtained from private commercial banks, or public institutions, notably
the International Monetary Fund (IMF).
What can one make of the concept of linkage today? Business groups are the
most relevant of the groups linking domestic markets to the world economy.
These will have an important voice over government policy-making, and are
likely to use their political clout to push governments into opening the economy
and adopt globalization-friendly policy stances. They are also more likely to
advocate the payments of debts incurred with external debtors and, in general,
to acquiesce to international demands for economic and political reform that
will improve the countrys image among the developed country constituents.
Another source of linkage is that of technocrats at senior levels of government.
Few are the high-level developing country technocrats nowadays who have not
worked or studied in the United States or Europe, leading to their forming an



ideological consensus very much attuned to that of their counterparts in the

developed nations.
The third mechanism under consideration is that of leverage. It involves the
direct use of diplomatic power by one actor over another. However, the units
exerting power here are non-state; indeed, in the sphere of economic policy the
Bretton Woods institutions are leaders: the International Monetary Fund (IMF)
and the World Bank. Leverage is usually exerted, in addition to these two, by
bilateral aid agencies, private banks, multinational corporations and others. The
IMF, of course, has exerted great influence over Latin America, particularly
after the early 1980s generalized debt crisis. The Funds imposition of Structural
Adjustment Programs in return for medium-term finance has translated into its
having an important say over the macroeconomic policy prescriptions and
proscriptions of these countries.
The foregoing discussion should give a preliminary idea as to how markets,
linkage and leverage constrain the toolkit of policy options available to LDCs
as well as rendering development trajectories significantly vulnerable to
exogenous forces. These ideas could be developed in much greater length and
detail, but this has already been done rather thoroughly.6 It is useful at this point
to stress two insights overlooked by dependency analysis with regard to the
global economic order. First, dependentistas navely painted a leveled economic
playing field for all nation-states (in both trade or monetary regimes), as stylized
accounts of liberal economists would have it. Second, dependency did not
acknowledge that power politics between countries, for good or bad, will always
shape in important ways the attributes of the international economic system
and thus the setting within which individual development strategies are pursued.
Political economist Robert Gilpin (2000, 42) puts it in more concrete terms:
the dominant powers in the international system play a major role in defining
the purpose of the international economy and the principal rules governing
international economic activities. Only someone blind to the political dimension
of international economic relations could deny that asymmetrical power relations
skew the rules of the global economic order in ways unfavorable to Latin America
and to the developing world in general. The world trade regime provides an
excellent example. The benefits for the developing world of lower tariffs for
products in which they specialize cannot be overstated. We are endlessly
reminded by reputed trade economists that freer trade in agriculture would do
much more for many poor countries than any amount of foreign aid or debt
relief. Yet, the narrow political interests of the powerful nations prevail. Whereas
successive trade rounds have reduced the average tariff on manufactured goods
from 40% to 4% in the past fifty years, the figure for agricultural tariffs remains
close to 40% (Economist, 25). The developed world has used much political



muscle in making sure the door to their agricultural markets remains shut. In
short, developing nations often get short-changed in international economic
forums. The process of globalization is fueled in important ways, not only by
technological trends, but also by deliberate political decisions. The strong
inevitably shape the nature of global economic integration much more than the
weak (i.e., the developing nations). Blinded by their economicism, this rather
basic insight was missed by most dependency writers.
Apart from all of its methodological and definitional deficiencies, dependency
theory has been empirically undermined by the recent historical experience of
many less developed countries. Those who may still hold to its fundamental
premise that underdevelopment is a process that perpetuates economic
backwardness, rather than a condition from which LDCs can escape, simply
choose to ignore recent economic history. However, it has been contended here
that dependency is useful in the limited sense that it offers an international
political economy framework for understanding underdevelopment. Economics
alone cannot account for many of the factors that restrict economic and social
progress. A reference to political economy dynamics in both domestic and
international arenas is necessary. Dependency analysis rightly emphasizes the
interdependence of economic and political relations in the international arena.
If the political-economic dynamics it spells out are often mistaken, at least it
gets the frame of reference right. In the final analysis, the study of
underdevelopment is patently incomplete by seeing the world through economic
lenses alone. After fifty years of development experience since the discipline of
development economics was born, scholars are increasingly coming to terms
with the reality that underdevelopment is the result of a bewildering array of
factors, economic and political, but also social, cultural, etc. We can say
retrospectively that the dependency movement was simply too intellectually
ambitious in seeking to account for underdevelopment with a general theory of
political economy. As one of the pioneers of development theory, Albert
Hirschman, wrote thirty years ago,
The attempt to produce general statements about the relationship
between politics and economics is likely to produce only banality
and frustration. For relationships at this level are either evident
and hence uninteresting, or are so complex and dependent on so
many other variables as to be unpredictable and inconclusive (1971,



It would be difficult to phrase more succinctly what has doomed dependency

to the dustbin of history.
Globalization means that Latin American economies are subjected to the
discipline of international financial markets as well as the threat of exit by local
and international investors. Dependency theorists would predictably use this
insight to validate their thinking by asserting that global economic integration
restricts the room for maneuver of many governments in matters fiscal and
monetary. While this is undeniable, reduced freedom of policy action is not
necessarily deleterious for development. In fact, many economists assert that
the new discipline imposed on developing nations by international markets has
weeded out the worst examples of irresponsible, populist policies of times past
by tying politicians hands. The international economic scene is quite different
from the one extant when dependency tenets were first being formulated in the
1950s and 1960s. But again, it is up to Latin American governments to take
advantage of the new opportunities and to limit the new risks that come with
this new world economic landscape. Their policies give them some leverage as
to the extent to which they want to control their individual economic destiny.
That is the good news. Dependency, in more pessimistic fashion, did not allow
for that possibility.



Bearing this in mind, the use of the term theory will be retained for the sake of convention
and simplicity.
The use of the past tense when referring to the dependency movement is deliberate
given that, for all practical purposes, the movement can be considered dead insofar as
there is not a critical mass of scholars that publicly defends it precepts. However, there
surely remain some dependentistas, and the dependency approach certainly characterizes
the work of some social scientists in Latin America, whether they carry the dependency
label or not.
A good study that throws light on the eminently political character of the dependency
approach is The Dependency Movement by Robert Packenham. In the view of many, it
stands as perhaps the most comprehensive assessment of dependency that has been written
to date. However, a good number of scholars have remarked that Packenham is just as
ideological as some of the dependency writers he attacks, and that he is blinded by his
obsession to undermine the dependency school. Other highly commendable studies of
dependency theory include: David Lehman. 1986. Dependencia: an Ideological History
Brighton: IDS PublicationsDiscussion paper 219; David Lehman. 1979. Development
Theory: Four Critical Studies London: Cass; Jorge Larran. 1989. Theories of
Development: Capitalism, Colonialism and Dependency Cambridge: Polity; Jorge






Larran. 1989. Latin American Theories of Development and Underdevelopment London:

Routlege; Bjorn Hettne. 1995. Development Theory and the Three Worlds: Towards and
International Political Economy of Development Harlow: Longman Scientific and
Technical; Joseph Love. The Origins of Dependency Analysis Journal of Latin
American Studies 22 (1990): 143-168; Joseph Love, Economic Ideas and Ideologies in
Latin America since 1930 in Leslie Bethell (ed.) 1994, Cambridge History of Latin
America Vol. 6, pp. 393-460.
The use of the Spanish equivalent here is not gratuitous, for a look at the words
epistemology yields more than a mere curiosity (Berzosa 1996). The prefix sub in Spanish
means derived from or as a consequence of. A literal reading of the term therefore
indicates that underdevelopment is a by-product of development (desarrollo). This is
precisely what the fathers of the dependency movement would contend:
underdevelopment should be thought of, not as a condition or state, but as a process, that
of the international capitalist system concurrently producing development and as a
necessary by-product underdevelopment.
Andre Gunder Frank negated the possibility of dependent development, emphasizing
that metropolitan centers extract surplus excesses and expropriate them to the detriment
of the periphery, these relations being framed in a zero-sum fashion.
See the excellent chapter by Barbara Stallings, International Influence on Economic
Policy: Debt, Stabilization and Structural Reform in Stephan Haggard and Robert
Kaufmann (eds.) The Politics of Economic Adjustment Princeton: Princeton University
Press, 1992.

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